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slega [8]
3 years ago
8

The Taffy Trust is a simple trust. Sean is its sole beneficiary. In the current year, the trust earns $12,000 in taxable interes

t and $30,000 in rental income. In addition, the trust recognizes a $4,000 long-term capital gain and $1,100 long-term capital loss. The trustee assesses a fee of $6,500 for the year. Depreciation related to the rental property is $2,800.
a. If the trust agreement allocates fees, depreciation, and capital gains and losses to corpus, trust accounting income is $
b. However, if the trust agreement allocates one-half of the fiduciary's fees as well as all of the capital gains and losses to income, the trust accounting income is $
Business
1 answer:
algol [13]3 years ago
3 0

<u>Solution and Explanation:</u>

a. <u>Accounting income is computed below: </u>

Taxable interest 12,000.00

Rental income 30,000.00

Long term capital gain 0.00

Long term capital loss 0.00

Fees 0.00

Less: depreciation -2,800.00

Trust accounting income 39,200.00

<u>b.</u> One half of fiducary's fee = 6500 divided by 2 = 3250. This amount will be allocated to accounting income of the trust.

Taxable interest 12,000.00

Rental income 30,000.00

Long term capital gain 4,000.00

Long term capital loss -1,100.00

Fees -3,250.00

Depreciation -2,800.00

Trust accounting income 38,850.00

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